How to Ask for Money When You Need Help

According to Charles Schwab’s 2019 Modern Wealth Survey, nearly 60% of Americans feel they’re living paycheck to paycheck, and nearly half carry a credit card balance. With burdens like student loan debt, wage stagnation, housing costs and more, it’s not surprising that many of us feel like we’re strapped for cash.

When you’re facing a mountain of financial obligations, you might feel like you have no choice but to seek financial support. While it can be an uncomfortable or humbling experience, there’s no shame in asking for a little help to get back on track.

Borrowing money versus going into debt

When trapped in a financial slump, you might feel unsure about where to turn. Most people have two options: borrow money from a friend or relative, or go into debt. Both options have pros and cons.

Borrowing money

Pros:

You typically won’t pay interest.

The loan terms may be more flexible.

Your credit score won’t be impacted.

Cons:

It might feel intimidating or embarrassing.

Friends or family members may not be willing to lend as much as creditors would lend.

Going into debt

Pros:

It’s much less awkward and uncomfortable.

You might be able to borrow more money.

Cons:

You’ll pay interest on the loan funds.

Your credit score will be impacted, although making on-time payments could help improve your credit.

While some might think it’s easier to handle their financial troubles quietly by using a credit card or taking out a bank loan, that’s not always an option for everyone.

“In some cases, the regular avenues [of financing] have been exhausted,” said Linda Matthew, accredited financial counselor® and owner of MoneyMindful Personal Finance Coaching. “You may have hit your credit limit, or you’re not willing or able to look into a loan from financial institutions.”

When you need money fast, Matthew recommends selling some items or taking on another job for the short term. If you still need more to cover those unpaid credit card balances or bills, you might think to borrow money from a friend or relative.

However, it’s important to remember that “a loan is never a way to sort out your finances,” Matthew said. “It’s a stop gap to give you breathing room while you sort it out.”

Whom should I ask for money?

If you decide to borrow money, it’s often best to ask someone who knows your situation and trustworthiness, such as a family member or close friend. When you have an existing relationship built on mutual trust, you may feel more comfortable asking for the amount needed and communicating a plan that works best for both parties.

Before you ask, be sure to consider the person’s own financial circumstances. If they’re struggling with their finances, too, then you may want to find a different source.

How to ask for money

Asking for money might feel awkward, but there are ways to ease the process. Here are some tips:

Ask for a specific amount. Don’t ask for too little or too much; simply be honest about how much you need, and let your loved one decide whether they’re comfortable lending it.

Be upfront about how you plan to use the funds. Don’t just say, “I need money.” Explain why you need it. Maybe you can’t make rent this month, or perhaps you need to cover an unanticipated car repair. Whatever the case is, being upfront about how you’ll use their money will make the lender more comfortable.

Treat it as a business arrangement. According to Matthew, it’s crucial you approach the situation as a business transaction rather than a casual arrangement.

“It can be difficult to mix friends and business, and this is business, so you need to keep it firmly in that territory,” she said.

Create a contract. Don’t just rely on a handshake deal; create a plan in the form of a contract so both parties are on the same page, and include details such as repayment methods and interest rates.

“I would suggest giving that person a very clear description of when you’ll pay them back, the interest rate if any, [and] what the monthly payments will be—then follow through,” said Matthew.

How do I avoid this in the first place?

No one likes being in this position, but in today’s economy, asking for money is sometimes inevitable. However, there are ways to decrease the risk of falling into a financial rut. To help you prevent this issue, consider these expert budgeting tips:

Create a budget

First and foremost, create a thorough, detailed budget so you can organize and accurately forecast your cash flow. This will alleviate stress and help you make more informed decisions about your future finances.

“It can be common, when people put together a budget, to put down fixed expenses—rent, utilities, car payments, gas, etc.—and overlook [the] fact that you need car maintenance,” said Matthew. “Something will break, [and] often people will say it’s an ‘unexpected expense,’ but you need to incorporate that into your budget.”

Additionally, she advises creating categories for activities such as going out with friends and shopping. Don’t forget to include expenses such as student loan bills.

Don’t avoid your finances

It can be scary to confront your finances head-on, Matthew said. As a result, many people choose to avoid budgeting altogether.

“It’s really the fear that we’re avoiding, and then what happens is that our finances take the hit,” Matthew explained.

Forcing yourself to look at your budget honestly can save you from unnecessary issues in the long run.

Search your own public records

If you’ve lost track of past financial obligations, you may want to run a search on yourself to potentially uncover any looming debts or unclaimed money.

If you’re in a financial bind, don’t be ashamed about asking for help. You may be able to borrow money from friends or family, and paying back that money will help prove you’re trustworthy and accountable. By drafting a contract with your friend or relative—and creating and following a budget—your finances may recover in no time.

Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.